FRAMINGHAM (06/30/2000) - Consolidation is well under way in the nascent world of online transportation marketplaces. But offering the right services for the best price remains a competitive advantage for targeted markets.
Logistics.com Inc. in Burlington, Massachusetts, and QuoteShip.com Inc. in Boston merged this week to form a transportation marketplace that covers all modes - land, air and sea - worldwide. Previously, Logistics.com specialized in land services, while QuoteShip.com served the air and ocean markets.
But with new Web-based transportation exchanges - which match up shippers and their freight with transportation providers and their trucks, trains, planes or ships - popping up almost weekly, picking the right online marketplace is almost as important as choosing the right carrier.
Paul Killebrew, international marketing manager at Airborne Freight Corp. in Seattle, said his firm had been planning to sign up with QuoteShip.com before the merger announcement. Now, he said, his company will join the electronic marketplace created by the merger.
"We liked their model out of all the [online exchanges] because they took into account the already existing relationships between the shippers and carriers," he said. "They allow a shipper to choose the carrier they would like [to do business with] from the carriers which have signed up with them."
Although Logistics.com may well be the first online marketplace to offer its services across all modes of transportation for both contract and spot transactions, analysts said that there doesn't seem to be much to distinguish any of the other Web-based exchanges.
Donald Broughton, an analyst at A. G. Edwards & Sons Inc. in St. Louis, said that, ultimately, only those that bring pre-existing relationships to the virtual world will survive.
"There are dozens of logistics exchanges," he said. "But when it all sorts itself out, there will only be a couple of dominant players - players that already have relationships with [shippers or transportation providers]."
Broughton said he believes Transplace.com in Plano, Texas, will be among the leaders. It was formed by the merger of the logistics units of the six largest publicly held trucking companies, including Covenant Transport Inc. in Chattanooga, Tennessee, and J. B. Hunt Transport Services Inc. in Lowell, Arkansas.
"While it's not a huge segment of the trucking industry, it does give them a real competitive advantage because of the relationships they already have with shippers," Broughton said.
Gary Nichols, director of dedicated fleet services at Contract Freighters Inc.
(CFI), a trucking company in Joplin, Missouri, said that although his company had researched various online exchanges, it was testing the online marketplace set up by CarrierPoint Inc. in Atlanta in part because of CarrierPoint's fee structure.
"CarrierPoint does not assess a fee to the shipper or carrier unless a transaction is completed," he said. "Other online exchanges charge a fee as soon as contact is made between the shipper and the carrier, and that fee is still due even if they back away from the transaction."
However, he added that small and midsize carriers would probably benefit more than a larger carrier like CFI, whose customers prefer service to the savings that might be generated by participating in an online exchange.
Robert Obee, vice president and CIO at Roadway Express Inc., an Akron, Ohio, trucking company, said he likes Kansas City, Missouri-based Freightquote.com because it understands how less-than-truckload transportation is bought and sold.